11

Some propositions of settlement will doubtless be
made, either by the Susquehanna and Tide-water Ca-
nal Companies or their lessee.

But whether they are made or not, it will be the duty
of the Legislature, to provide for the protection of the
State's interest in the mortgages, which it holds against
these canals, either by foreclosure or re-entry.

As the law now stands in this regard, it is consid-
ered doubtful whether the treasury officers or the
Board of Public Works have any authority, without
further legislation, to compel either the canal com-
panies or their lessee to make a settlement of these
mortgages, or the arrearages due thereunder.

In this connection it is proper to state that the claim
which the Sta.te held against the Philadelphia and
Reading Railroad Company for debenture scrip,
amounting to one hundred and fifty thousand dollars,
and which had been considered of no value, has been
settled upon the payment of forty-five thousand dol-
lars.

THE STATE DEBT.

The debt of the State, on the 30th day of September,
1887, is shown by statement J, to be $10,960,535,56. The
State holds stocks and bonds on which interest or divi-
dends are paid, amounting to the sum of $5,299,301.60.
Deduct these and there remains as the net debt of the
State, 30th September, 1887, the sum of $5,661,233.96.
The net debt of the State, on the 30th day of Septem-
ber, 1886, was $6,113,159.68 ; which shows a total reduc-
tion in the debt during the fiscal year 1887, of the sum
of $451,925.72.

Before the meeting of the next Legislature the sterl-
ing debt of the State, amounting to 14,001,111.11, will
fall due and mature. No special tax has ever been
laid for the redemption of this debt, and, therefore,
there is no sinking fund for its payment.

This debt was created in the year 18.38, for the pur-
pose of raising money to enable the State to aid in the